Toronto manager Stephenson plans to launch C$40 million hedge fund

Wed Jun 25, 2014 2:03pm EDT
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By John Tilak

TORONTO (Reuters) - John Stephenson, a prominent Toronto-based money manager, said on Wednesday he plans to launch his own hedge fund, a vehicle he thinks will be best-placed to take advantage of potential volatility in stock markets trading near record highs.

A former executive at First Asset Investment Management, Stephenson expects his first product to be a C$40 million ($36.86 million) North America-focused fund. He hopes to follow that up with other offerings and sees the money manager playing an activist role in corporations over time.

The long/short Stephenson & Co North American Opportunity Fund LP, which is likely to be launched in August, will initially be weighted heavily toward the U.S. market.

Stephenson believes the U.S. economy is on a firmer footing than its Canadian counterpart.

“The U.S. consumer has dug themselves out of a hole, whereas we continue to dig ourselves into a hole. That's just the reality,” he said.

The Toronto Stock Exchange's benchmark index .GSPTSE has gained about 27 percent in the last year, and many investors are worried about valuations becoming extended and the risk of a market pullback.

“In the last few years, it probably hasn't mattered if you had alternative investments or not because the market was going straight up,” said Stephenson, author of "The Little Book of Commodity Investing."

“You really want a hedge fund when things are choppy,” he said. “You want the manager to be able to hopefully turn in positive performance in bad markets. That's the idea.”   Continued...